Goldman Sachs: Azul Appears Poised For EBITDA Expansion After Stock Declined 35%

Azul SA AZUL joined other stocks making big moves on Wednesday.

The company's shares declined by around 35% over the past three months, but it appears poised for EBITDA expansion going into 2024, according to Goldman Sachs analyst Bruno Amorim.

The Azul Analyst: Amorim upgraded the rating for Azul from Neutral to Buy, raising the price target from BRL 24.30 ($14.90) to BRL 29.90 ($18.30).

The Azul Thesis: Skepticism around the company’s ability to pass on higher jet fuel prices to tariffs has exerted pressure on the stock, Amorim said in the upgrade note.

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Azul was able to pass on the effect of higher fuel costs to tariffs in 2022, “as the whole market has been rational and focused on rebuilding profitability towards pre-pandemic levels,” the analyst stated. The current state of the competitive environment should also “allow for price increases over the next few quarters to offset higher costs,” he added.

“We believe the recent sell-off in the sector (share prices down 15-42% in the past 3 months) has opened an opportunity given the rational state of the main markets in the region,” Amorim added.

AZUL Price Action: Shares of Azul had risen by 14.03% to $9.43 at the time of publication Wednesday.